The environment thread

[Chisoxfn]

Yeah, I wasn't trying to put blame on the shareholders, but their gains are still not legitimate. VW the company committed international regulatory fraud, and part of their stock's value was based on that deception.

 

As far as who owns VW, there was actually a weird story several years back where Porsche essentially became a hedge fund company that also made cars, made a bunch of aggressive moves to try and gain control of VW, had it all blow up and their face and were then taken over by VW. The two companies are linked back to their founders, the Porsche and Piech families. A German state/province actually owns 20% of VW, Porsche's holding company owns 50%, Qatar owns 17% and I think the rest is publicly owned.

The shareholders invested in a company based upon the information they were aware of. They invested based upon historical performance and historical gains and future outlook...having no idea that the company was tainted.

[illinilaw08]

The shareholders invested in a company based upon the information they were aware of. They invested based upon historical performance and historical gains and future outlook...having no idea that the company was tainted.

 

Not to get off of a tangent here, but the most analogous investor situation is a Ponzi scheme. When Ponzi schemes ultimately blow up and end up in insolvency proceedings (bankruptcy, receivership, etc.), the innocent investor can still be forced to disgorge their profit.

 

Now, obviously VW is not a Ponzi scheme, but there are real word examples of investors disgorging profit when the company was engaging in illegal activity to earn that profit...

[StrangeSox]

Nobody's going to claw back VW earnings I don't think, but obviously their stock is going to take a hit with or without the completely deserved fines. They're going to have to spend billions to fix their customers' cars, and they've done a lot of damage to their brand in a country where they already struggle.

[NorthSideSox72]

Not to get off of a tangent here, but the most analogous investor situation is a Ponzi scheme. When Ponzi schemes ultimately blow up and end up in insolvency proceedings (bankruptcy, receivership, etc.), the innocent investor can still be forced to disgorge their profit.

 

Now, obviously VW is not a Ponzi scheme, but there are real word examples of investors disgorging profit when the company was engaging in illegal activity to earn that profit...

I don't think that is analagous at all. VW is a publically traded company. Rules around stock, common or preferred, offer a broad shield to the investors. Basically, unless they had material knowledge of the ongoing fraud, they have no liability.

 

[illinilaw08]

I don't think that is analagous at all. VW is a publically traded company. Rules around stock, common or preferred, offer a broad shield to the investors. Basically, unless they had material knowledge of the ongoing fraud, they have no liability.

 

My point - which clearly wasn't articulated well - was "investor relied on prior performance of company" does not, in all cases, shield that investor from liability (see Ponzi schemes).

 

I'm not saying that VW shareholders would or even could have gains clawed back. Poorly worded on my part.

[NorthSideSox72]

My point - which clearly wasn't articulated well - was "investor relied on prior performance of company" does not, in all cases, shield that investor from liability (see Ponzi schemes).

 

I'm not saying that VW shareholders would or even could have gains clawed back. Poorly worded on my part.

Gotcha. Of course this is kind of a moot topic anyway, as what happens here is the company's stock tanks, so there are no profits to claw back. Then you get into the possibilty of the company being sued - not just by vehicles owners which is already happening - but by shareholders for being duped.

 

VM faces massive fines, owner lawsuits for loss of value, shareholder lawsuits for loss of worth, loss of money due to inability to sell cars held in stock, recall and re-engineering costs for existing AND new cars, and gigantic reputational damage. This is a massive company who has gone from reasonably successful into a pit of despair in a period of days, all because some people decided to put some illegal code into the software system.

 

[Chisoxfn]

My point - which clearly wasn't articulated well - was "investor relied on prior performance of company" does not, in all cases, shield that investor from liability (see Ponzi schemes).

 

I'm not saying that VW shareholders would or even could have gains clawed back. Poorly worded on my part.

I never was arguing about shielding or not. I was arguing that it is amazing how everyone jumps to the money vs. putting the responsible people behind bars. You have a swift hand in providing justice without punishing all of the shareholders for those consequences (you know...those investors who lose retirement dollars, etc). Amazing how company execs jump to pay the fine, which yes, impacts the company, but doesn't nearly impact their jobs as much as it impacts all of the investors account balances. Send those who conspired and put them behind bars and that is a different story.

 

Key being evidence exists for those at the top that you charge (direct evidence that they were aware).

[cabiness42]

I never was arguing about shielding or not. I was arguing that it is amazing how everyone jumps to the money vs. putting the responsible people behind bars. You have a swift hand in providing justice without punishing all of the shareholders for those consequences (you know...those investors who lose retirement dollars, etc). Amazing how company execs jump to pay the fine, which yes, impacts the company, but doesn't nearly impact their jobs as much as it impacts all of the investors account balances. Send those who conspired and put them behind bars and that is a different story.

 

Key being evidence exists for those at the top that you charge (direct evidence that they were aware).

 

So how about a law that makes a company liable for the losses shareholders suffer due to wrongdoing by the company?

[NorthSideSox72]

So how about a law that makes a company liable for the losses shareholders suffer due to wrongdoing by the company?

These laws exist in many countries, including most in Europe. The US version of the corporate veil is much harder to pierce, which can be good and bad.

 

[StrangeSox]

I never was arguing about shielding or not. I was arguing that it is amazing how everyone jumps to the money vs. putting the responsible people behind bars. You have a swift hand in providing justice without punishing all of the shareholders for those consequences (you know...those investors who lose retirement dollars, etc). Amazing how company execs jump to pay the fine, which yes, impacts the company, but doesn't nearly impact their jobs as much as it impacts all of the investors account balances. Send those who conspired and put them behind bars and that is a different story.

 

Key being evidence exists for those at the top that you charge (direct evidence that they were aware).

I am 100% in favor of criminal prosecutions in addition to whatever fines are assessed.

[Balta1701]

all because some people decided to put some illegal code into the software system.

Let's not undersell this, this wasn't just "illegal code inserted into a software system", this was a deliberate effort to defraud the system to sell more vehicles.

 

They wanted to market these cars as "clean diesel" so that people who had environmental concerns would purchase them, but they also wanted to have their cars feel more overpowered on the road compared to what anyone else has tried with similar models and do so with a lower total cost. This was a major part of why those cars existed in the first place - had they actually met emissions standards they would have sold significantly fewer cars or made much less money on them, either due to higher costs or due to people turning away from them due to them being more substantially underpowered.

 

As stated above, I know people who purchased these cars. They came to that decision because: they're a good value, good gas mileage, environmentally sound, and solidly performing/reliable car. They only got to that point through fraud. Change 2 of those items, either the affordability or the performance/gas mileage, and they would not have purchased those cars.

[Chisoxfn]

BMW was also hit with this issue on their diesels. Wonder how many other car manufacturers are / were doing this?

[StrangeSox]

Statistically speaking, their fraud at best caused serious respiratory problems for a number of people and, odds are, resulted in some deaths.

[bmags]

BMW was also hit with this issue on their diesels. Wonder how many other car manufacturers are / were doing this?

 

When did this happen? Thought I read today that the other german car manufacturers were not affected.

[StrangeSox]

BMW was also hit with this issue on their diesels. Wonder how many other car manufacturers are / were doing this?

Right now the reports are just that their X3 diesel is above EU limits. There's no indication of deliberate fraud at this point.

[Balta1701]

BMW was also hit with this issue on their diesels. Wonder how many other car manufacturers are / were doing this?

Where did you see that? The report I saw was that this was discovered because a research group was comparing BWM and VW diesels in real world tests and found that BMWs closely matched their lab performance in nitrogen emissions whereas the VW models were like 60000% worse or something on that order (and I'm not lying about the number, it was a factor of several thousand).

[StrangeSox]

When did this happen? Thought I read today that the other german car manufacturers were not affected.

I don't think it's related to the VW scandal, it just came out at the same time.

 

http://www.bloomberg.com/news/articles/201...ceeded-eu-limit

 

The VW scandal does potentially impact Audi and Porsche as they're both owned by VW and share engine platforms on some models (the three have had design relationships going back decades, e.g. the control arms on some 80's Porsches are the same as a Volkswagen Rabbit).

[Chisoxfn]

BMW's issue was on emissions (not necessarily that they committed the fraud or not). No one knows whether fraudulent or not but they took a pounding on the market today (down 5%+).

[NorthSideSox72]

Statistically speaking, their fraud at best caused serious respiratory problems for a number of people and, odds are, resulted in some deaths.

While I agree with the fairly well-proven theory that smog and fumes increase risk for those issues, I think it is an enormous stretch to pin blame for deaths on some one manufacturer of vehicles, even if they deliberately skirted the regulations. I think VW should be hit very hard, and they will be, but I certainly hope you aren't suggesting they be gone-after for some sort of homicide.

 

[StrangeSox]

While I agree with the fairly well-proven theory that smog and fumes increase risk for those issues, I think it is an enormous stretch to pin blame for deaths on some one manufacturer of vehicles, even if they deliberately skirted the regulations. I think VW should be hit very hard, and they will be, but I certainly hope you aren't suggesting they be gone-after for some sort of homicide.

 

No, I don't think there's even a legal mechanism in place to do something like that. But the excessive pollution, particularly NOx, is known to cause serious respiratory problems in some people up to and including death. You can't show direct causality, but I think it'd be like the long effort to show the harm of lead in gasoline or tobacco. Another comparison would be the estimates that the EPA and other agencies put out for things like how many people die each year due to coal plant emissions--hard to prove for an individual death, but a much stronger case in the aggregate.

[Balta1701]

No, I don't think there's even a legal mechanism in place to do something like that. But the excessive pollution, particularly NOx, is known to cause serious respiratory problems in some people up to and including death. You can't show direct causality, but I think it'd be like the long effort to show the harm of lead in gasoline or tobacco. Another comparison would be the estimates that the EPA and other agencies put out for things like how many people die each year due to coal plant emissions--hard to prove for an individual death, but a much stronger case in the aggregate.

By case note that you mean "scientific case" and not "legal case" because it would be virtually impossible to make that legal case since you couldn't directly connect any specific death to the fraud - you can't prove it was the emissions from this one car that caused a fatal asthma attack rather than general emissions in the area from the other 10 million cars.

[StrangeSox]

yeah that's another way of stating it. Not legal argument but an ethical one over the damage their deliberate fraud will cause.

[bmags]

I'm sympathetic to NS's claim on this for punishing shareholders who in many ways were defrauded too. They were not provided with information that the company was going to conduct risky behavior which could come at this cost.

 

But I'm not sure I see a great way out of it. While criminal cases should happen for those directly responsible, those cases are difficult to prosecute. At some level, the shareholders profited from fraudulent activity, even unknowningly. Should that profit be protected for them?

 

I think part of this is just the risk of investing in individual companies. I do think there should be recourse for shareholders to claim penalties, in much the same way they can if a company misleads on their ipo filings or reports.

[Chisoxfn]

I'm sympathetic to NS's claim on this for punishing shareholders who in many ways were defrauded too. They were not provided with information that the company was going to conduct risky behavior which could come at this cost.

 

But I'm not sure I see a great way out of it. While criminal cases should happen for those directly responsible, those cases are difficult to prosecute. At some level, the shareholders profited from fraudulent activity, even unknowningly. Should that profit be protected for them?

 

I think part of this is just the risk of investing in individual companies. I do think there should be recourse for shareholders to claim penalties, in much the same way they can if a company misleads on their ipo filings or reports.

That is what will happen. Of course the only party that wins in this is the attorneys, who are looking their chops at all the money they will make litigating these settlements.

[StrangeSox]

Obama Announces He Will Reject Keystone XL Pipeline

 

Overall, the demand for such a pipeline isn't what it once was, anyways. Canadian tar sands oil is very expensive compared to other forms of oil, and it's hard to make it work with oil prices where they've been for a while now.